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A look back at 2014 trends in product liability class proceedings

Hello 2015 From the Cassels Brock Product Liability Group, welcome back and we hope you enjoyed some time off this holiday season. What better way to greet the new year than with a look back over trends in product liability class actions from 2014.

This past year, claims against pharmaceutical and medical device manufacturers were on the rise, while claims against retailers for credit card and data breaches were less frequent (and therefore there were fewer claims against manufacturers for those same breaches in relation to their products). The plaintiff friendly landscape for certification of pharmaceutical claims may be shifting, but that has not slowed the influx of class actions commenced against pharmaceutical manufacturers.

What follows is a look back on trends in product liability class proceedings during 2014.

Pharmaceutical Product Liability

Across Canada in 2014, at least 15 class proceedings were commenced alleging the failure to warn of the risks associated with the use of prescription drugs. These pharmaceutical product liability class proceedings include the following:

class actions seeking national class certification were brought in British Columbiai, Albertaii, Quebeciii, Manitobaiv and Nova Scotiav against Boehringer Ingelheim as the designer, manufacturer and distributor of the blood thinner Pradaxa in Ontario alone, four separate class proceedings against designers, manufacturers and distributors of testosterone replacement therapy, including Merck and Pfizer, were filed. These actions alleged a failure to warn of the cardiovascular risksvi a series of claims in respect of Risperdal and Invega, the antipsychotic medication used to treat schizophrenia and symptoms of bipolar disorder, were brought against Janssen in Ontariovii, Quebecviii, Albertaix and Nova Scotiax alleging the failure to warn of the increased risk of developing gynecomastia the designers, manufacturers and distributors of Accutane, an acne treatment prescription, were faced with a class proceeding in Ontarioxi and a class proceeding regarding Topamax, a prescription used to treat seizures, was brought against Johnson & Johnson in Saskatchewan alleging the failure to warn of the associated risks, namely the risk of birth defects and vision problems.xii

While none of these class proceedings have moved to the certification stage , we anticipate that the plaintiffs that move their actions forward will likely have to satisfy a more rigorous analysis to be certified in light of the Martin v Astrazeneca Pharmaceuticals PLCxiii decision. In that case, Justice Horkins of the Ontario Superior Court did not certify a proposed national class action involving the antipsychotic medication Seroquel. In contrast to the low hurdle for certification seen in previous years, the Court found that the plaintiffs failed to meet the necessary criteria and noted that the certification of similar issues in other cases is not sufficient to warrant certification in every case. So why is this decision relevant? It was upheld on appeal and suggests that Ontario courts may take a more rigorous approach in applying certification standards.

Implanted Medical Device Product Liability

Manufacturers and distributors of implanted medical products were increasing targets in class proceedings in 2014. Manufacturers in the medical device industry have been under attack for the failure to, among other things:

properly design and manufacture the implanted medical device conduct adequate testing before placing the device on the market and warn of the risks associated with implanting the medical device.

In two Quebec proceedings,xiv the plaintiffs brought claims against the manufacturers and distributors of pelvic mesh products implanted in the uteri of female patients. Actions for defective implanted hip replacement devices also continued into 2014. In Mary Chipman v Biomet, Inc. et al,xv a Nova Scotia action, the plaintiff seeks to certify class proceedings against the manufacturer of the hip implant system. Similar claims were also brought against Biometxvi and Smith & Nephew in 2013.xvii

The actions come on the coattails of the Depuy decisionxviii, in which the Ontario Superior Court certified a class action against a manufacturer of surgically implanted hip replacements. The case marked a more generous approach to the certification of medical device class actions after a series of earlier cases that had applied a more cautious approach. In light of the certification, we expect that other implanted medical devices will come under fire, but it stands to be seen whether the actions will continue to be met with plaintiff friendly courts.

Credit Card and Data Breach Product Liability

In the past years, credit card and data breaches by hackers have been noted frequently in the media, which has resulted in a flurry of class proceedings. While 2014 saw a decline in these attacks and corresponding class actions, manufacturers of hardware must still take caution that their products meet all necessary security requirements.

From 2011 to 2013, we saw many class actions filed following data breaches. The first was commenced against Sony Playstation Network after a privacy breach of millions of its users. In this case, the class members alleged negligence in the storage and security of their credit card data. We also saw a class proceeding commenced on behalf of all Canadian residents whose electronic data and communications were intercepted by Google Street View vehicles between 2009 2010,xx alleging intentional or negligent interception of data.

TD Auto Finance Services&rsquo loss of a data tape containing customers&rsquo personal and credit information led to a class proceeding in 2012.xxi Members of the class claimed that they fell victim to identity fraud before the company notified those at risk.

When a portable hard drive was stolen in late 2012, 583,000 Canada Student Loan borrowers had finance and credit information compromised, including their SIN numbers.xxii Negligence and breach of confidence and fiduciary duty were pleaded in the subsequent class action. Another class action was filed in the Federal Court for breach of contract, breach of warranty, breach of confidence, reckless intrusion upon seclusion and negligence.xxiii

To date, there have been 641 reported breaches of consumer data in the U.S. alone.xxiv Data breaches are no less prevalent in Canada: 36 of IT professionals surveyed reported that their companies had been the targets of data breaches.xxv

Most notably in 2014, hackers stole the card data of 56 million Home Depot customers. Despite an increase in data breaches in 2014, class action litigation alleging damages from negligence and intrusion into one&rsquo s privacy has decreased.xxvi In 2014, only the Home Depot class action was commenced. In that case, customers who used credit or debit cards between April and August 2014 claimed for damages.

Despite the trend of class actions being commenced in respect of data breaches, there has been a drop off in such claims in 2014. Why? One reason could be the lack of certainty among plaintiff side class action firms as to whether these proceedings will be certified &ndash none of the above mentioned cases have been tested by the courts.

It is hard to say if a class action is the best method for data breach claims. In assessing whether a class action is the preferable means, the courts will consider whether the process will achieve a just and effective remedy. With the increase of data breach incidences, companies have become better at recognizing breaches and taking immediate steps to remedy potential damage. When a company recognizes a breach of confidential data, notifies its customers promptly and implements remedies to mitigate or prevent losses, the courts may view these steps as an appropriate and efficient substitute to a class proceeding.

While there remains a risk of data breaches, the trend of class proceedings following such breaches will continue to be selective, due, in part, to the proactive and face saving steps taken by some of the companies under attack.

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